Trade Agreements and the Environment: An Industry Level Study for NAFTA
Global Economy Journal, 2006
The aim of this paper is to explore two apparently unrelated issues – regional trade agreements and the pollution-haven hypothesis. They are linked by the belief that the elimination of trade barriers will further encourage firms already considering a move to countries with weak environmental regulations. Given the proliferation of trade agreements, as well as the movement of environmental issues to the forefront of our political process, a better understanding of policy effects is needed. We apply a variation of the gravity model to a data set of industry-level foreign direct investment from the Unites States to 26 partner countries from 1982 to 1999. We find strong evidence in support of the pollution-haven hypothesis. We also find the NAFTA increase outflows of US FDI. Finally, the NAFTA appears to encourage the pollution haven effect.
Regional Trade Agreements and Foreign Direct Investment
North American Journal of Economics and Finance, 2006
This paper investigates the relationship between regional trade agreements, such as the NAFTA, and FDI. Using both a fixed-effects gravity model and knowledge-capital model to estimate OECD panel data spanning 1982 to 1997, we learn that trade integration encourages FDI. We find specific evidence for each of the NAFTA member countries – Mexico, Canada and the United States. Support is also found for the notion of anticipatory effects. In addition, we find evidence that FDI will rise with host and parent country GDP and fall with distance.
Evidence Linking Exchange Rates and Foreign Direct Investment
International Trade Journal, 2008
This study investigates the effect of fluctuations in and volatility of the real exchange rate on foreign direct investment. A fixed-effects variation of the gravity model is applied to panel data of 55 countries from 1980 to 1997. Weak host currencies and greater exchange rate volatility are found to discourage FDI flows. Further, an existing presence in the form of previous investment is found to mitigate the detrimental impact of a weak currency.
Grade Dropping in Intermediate Macroeconomics
forthcoming in the New York Economic Review
When preparing a course, professors are often tempted to allow students to drop an exam. In many cases, this is done without a full understanding of the impact on the students overall performance. This study seeks to understand what impact this policy will have the student’s performance in class. In addition, we will seek to understand the effects on the student’s likelihood to miss an exam and to drop or withdraw from the course. We will use data from Intermediate Macroeconomics. One section of this course was taught each semester for ten semesters. In six of those semesters, students were allowed to drop one exam score while in the remaining four semesters, all scores were included in the final grade.